Condo34 New Launches Most Likely To Have Developer Discounts
- by Sean
- May 16, 2020
- 4 min read
You might have seen this recent article on developer prices:
“Half of developers likely to cut prices of Singapore new launches.”
While it sounds like developers are going to be releasing developer discounts soon, a closer read reveals that these were just sentiments recorded by participants in the survey.
So according to the Real Estate Sentiment Index (Resi) published by the National University of Singapore Real Estate (NUS+RE), the index has hit a record low of 3.2 in the first quarter of 2020.
Which basically means sentiment is low, as any score below 5 indicates poor conditions.
But what about their expected outlook on prices?
Well, half of those surveyed expected new launch condo prices to be maintained over the next 6 months.
The other half predict that prices are likely to be substantially or moderately lower in the next 6 months.
And of that, about 54 per cent projected that new launch sale prices would decline by 2 to 5 per cent in 2020 – while 46 per cent think prices would decline by 5 to 8 per cent.
So you may be surprised to hear that developers in Singapore still managed to sell 277 new condo units in April despite the strict circuit breaker measures.
In other words, despite the severe limitations of closed showflats and no viewings – selling 277 units is no mean feat at all.
But on the other hand if you were to compare it to last April 2019, this has dropped by 62.4% from 737 units previously.
With the way the Covid-19 situation has been developing, the drop in sales volume is surprising no one.
Developments with developer discounts
We’ve already started to see some early developer discounts from our new launch price list.
But if you’ve been looking for some really attractive developer discounts – that hasn’t really materialised yet.
Most of the discounts that we’ve seen so far are for “star buy” units, so units that are usually hardest to sell (bad facing, noisy, low floor) are being pushed out.
Developers have also been handed a helping hand from the Government, with listed Singapore developers getting exemption from the QC scheme, and a six month extension for the sale of housing units in terms of ABSD remission and QC scheme.
But moving forward, it is likely to expect to see some more developer discounts from certain new launches.
We’ve decided to identify those developments that are most likely to feature developer discounts soon, and we’ve set them apart based on a combination of factors:
- Large developments – more units, more liability come closer to TOP date
- High profit margin – more room for discounts
- Poor sales – developers need to sell 30% of a development before obtaining their loan to proceed with construction from the bank
Developments With High Profit Margin And Less Than 30% Take Up Rate
|Project Name||Current Selling Price||Launch||No of units||Take up rate||Est Margin|
|The Lilium||~$2,100||May 2019||80||1.30%||30.75%|
|Petit Jervois||~$2,800||Nov 2018||55||3.60%||47.85%|
|Urban Treasures||~$1,950||Nov 2019||237||8.90%||21.06%|
|Sloane Residences||~$2,800||June 2019||52||9.60%||30.80%|
|Wilshire Residences||~$2,450||Apr 2019||85||11.80%||32.58%|
|Meyer Mansion||~$2,750||Sep 2019||200||17.50%||44.97%|
|Haus on Handy||~$2,900||Jul 2019||130||17.60%||24.07%|
|Van Holland||~$2,950||Jan 2020||69||20.30%||33.66%|
|Dunearn 386||~$2,500||Jul 2019||36||22.90%||32.46%|
|Uptown @ Farrer||~$1,800||Sep 2019||116||24.10%||22.83%|
|The Iveria||~$2,600||Nov 2019||60||25.50%||31.43%|
|Daintree Residence||~$1,600||July 2018||327||28.70%||23.27%|
|RV Altitude||~$2,900||Jan 2019||140||29.30%||28.67%|
*It’s worth noting that for Van Holland, The Iveria, and Meyer Mansion were all launched quite recently hence the lower take up rate.
**We’ve also taken out GuocoLand projects like the Avenir and Midtown Bay as traditionally they have a history of not doing much developer discounts for their projects.
Large Developments With Less Than 30% Take Up Rate
|Current Selling Price||Launch||No of units||Take up rate||Est Breakeven||Est Margin|
|Treasure @ Tampines||~$1,350||Mar 2019||2200||49.10%||$1,113||20.04%|
|Parc Clematis||~$1,600||Aug 2019||1,765||41.90%||$1,312||22.94%|
|Avenue South Residence||~$1,950||Sep 2019||1125||44.10%||$1,641||18.77%|
|The Jovell||~$1,200||Sep 2018||428||28.00%||–||–|
|Fourth Avenue Residences||~$2,400||Jan 2019||476||24.20%||$2,059||17.00%|
|Dairy Farm Residences||~$1,550||Nov 2019||589||8.30%||$1,355||14.39%|
|Leedon Green||~$2,700||Jan 2020||672||6.60%||$2,444||11.42%|
*We’ve included Treasure @ Tampines, Parc Clematis, and Avenue South Residence despite all 3 having surpassed the 30% unit sold requirement mark to proceed – primarily because of the sheer number of units these developments have to move.
Small Developments With Less Than 30% Take Up Rate
|Project Name||Current Selling Price||Launch||No of units||Take up rate||Est Breakeven||Est Margin|
|Cuscaden Reserve||~$3,500||Sep 2019||220||2.10%||$3,131||9.71%|
|Pullman Residences||~$2,750||Nov 2019||348||2.40%||$2,503||9.87%|
|The Gazania||~$2,000||May 2019||250||9.60%||$1,856||11.64%|
|Juniper Hill||~$2,800||May 2019||120||10.40%||$2,502||12.31%|
|The Antares||~$1,750||Sep 2019||265||12.80%||$1,608||9.83%|
|The Hyde||~$2,900||May 2019||117||13.70%||$2,600||11.54%|
|Casa Al Mare||~$1,500||Aug 2018||49||28.60%||–||–|
|Coastline Residences||~$2,600||Apr 2019||140||20.80%||$2,150||15.72%|
Any developments that you feel we’ve missed out? Feel free to reach out to us at email@example.com or comment below!